Thursday October 27, 2011 3:31 pm

Verizon to take on AT&T, Comcast with residential LTE service

Verizon has indicated that it plans a residential LTE broadband service that could roll out in the fourth quarter, a fixed antenna that would challenge AT&T, Comcast and others for a home broadband connection.

Verizon also reiterated that it plans to concentrate its FiOS investments in areas it already serves.

Verizon executives said that a national rollout of a fixed broadband LTE voice and data package could be based on the "cantenna," a fixed antenna that it has already deployed with DirecTV, according to comments made by Francis J. Shammo, Verizon's chief financial officer, during Verizon's earnings call last Friday.

While Verizon executives did not state that the company was winding down its residential fiber optic (FiOS) service, executives gave several hints that geographic expansion was not in the cards. Verizon already serves 16.27 million premises in its 12-state wireline service territory, representatives said via email, mostly on the East Coast. But Verizon also began indicating in 2010 that it was going to focus its FiOS investments on the markets it already serves, last year.

Expenses related to Hurricane Irene forced unexpected storm-related costs, Verizon said. In part due to the storm, the backlog for new FiOS installations spiked to 1.8 times its peak in September, dropping to 1.2X by the end of the quarter, Shammo said.

FiOS also falls under the auspices of the company's Wireline unit. "And I think we've been very clear that above all, our objective is to improve the overall profitability and cash flow of the Wireline unit," Shammo said.

According to Shammo, Verizon's FiOS business plans include "further penetrating existing markets, [where] we will enhance our capital and operating efficiency and improve overall investment returns," according to a transcript from Seeking Alpha.

But a buildout in the markets the company already serves would be less expensive than building the infrastructure from scratch in an entirely new region. Wireline capital spending of $4.8 billion was 6.5 percent lower than last year, Shammo added.

A Verizon spokesman said he had no additional information beyond Shammo's comments.

"Cantenna" could anchor Verizon's rural strategy
Instead, Verizon seems to be leaning towards deploying a fixed broadband LTE solution in rural areas, a fancy way of stating that it is planning to put a fixed wireless antenna in homes, which could communicate to computers or other devices via Wi-Fi or Ethernet. The LTE connection would be Verizon's answer to a cable or DSL connection from a supplier like Cox or AT&T.

Verizon already has deployed the "cantenna" - a round antenna that looks like a can - in conjunction with DirectTV. On the call, Michael Rollins of Citigroup asked about Verizon's plans in that direction, and whether a similar program would be rolled out nationally.

"Well, we are and you're going to see that come in the fourth quarter with the -- what we now call the cantenna, which is not a commercial name obviously, but it's the antenna that we actually try with DirecTV, which was extremely successful," Shammo said. "And again, the benefit of this antenna is it operates the spectrum extremely efficiently. So if you look at a MiFi card or a dongle, this is very, very efficient, way above those two devices, which is why it's critical to have that bundle with that cantenna. So when we launch that, you're going to see us go nationally with that type of an offer."

A Verizon spokesman suggested that such a rollout might favor rural customers.

"'Cantennas' are can-shaped antennas that can communicate with our nationwide LTE network to provide wireless broadband in a fixed location and might be well-suited, as Fran suggested, for deployment to homes in rural areas where wireline broadband services are hard to reach," the Verizon spokesman wrote. "With no roaming involved, such a service might be spectrum-efficient for broadband use in certain markets."